How you can profit from making your grandkids proud ...with an ethical Isa
PEOPLE wanting to invest in a way that will make their grandchildren proud are increasingly turning to ethical Isas. These are plans where money is allocated to shares, funds, bonds or even cash deposits that go towards companies or projects that make a positive impact on society.
Those looking at these socially responsible options for their £20,000 Isa allowance this tax year are joining a small but growing band that is burgeoning faster than the market as a whole.
According to the Investment Association, sales of ethically minded funds leapt from about £371million to £1.3billion in the three years to 2018 while total fund sales to retail investors fell from £23billion to minus £5.5billion – where overall more investments were sold than purchased.
The original ethical funds simply shunned ‘sinner’ shares such as tobacco and firearms manufacturers. But the more modern approach is to back companies that make their money from doing something positive, including doing business in a fair and progressive way.
The purist ethical investor might disapprove but an oil company developing renewable energy alternatives would even make the grade in this brave new world of responsible investing. Rebecca Jones, of investment website Good With Money, says the ethical approach can only grow in importance because ‘the world’s problems are not going to solve themselves’.
She says: ‘There is a £1.9billion gap to fill to meet the United Nations’ sustainable development goals which include the transition to clean, safe energy and water, equality of women and healthcare and education for all.’ Evidence suggests that investors need not sacrifice profit for ALTrUIsTIc: Investor Meg Blumsom their principles. Fund analysis firm 3D Investing found that nearly four out of five of the 300 funds that it considers to have good to strong sustainability credentials outperformed their sectors in the three years to the end of February.
While the trend for ethical investing is often associated with the altruistic young, a new survey by investment trust Impax Environmental Markets suggests that the over-55s are amongst those most passionate about backing companies that are making a beneficial impact. Among them is Meg Blumsom, 68, a retired probation officer from Cirencester who has three young grandchildren.
She has been investing ethically on the youngsters’ behalf for several years through Isas with ethical bank Triodos. She says: ‘I am concerned for my grandchildren’s future not just to help them with university fees or getting on the housing ladder, but what sort of life will be there for them in the future.
‘By investing ethically I am able to do something positive, either by supporting renewable energy or through helping to develop sustainable communities.’